Keith Fitz-Gerald, Money Morning's Chief Investment Strategist, discusses Ben Bernanke's potential Senate confirmation and the "trillion dollar question" of the Fed's "exit strategy" on Fox Business. Keith also looks at how the Fed could be reined in by Congress in the years ahead. For Keith's specific recommendations on how to profit no matter how the […]
Archives for December 2009
December 2009 - Page 4 of 10 - Money Morning - Only the News You Can Profit From
Investment News Briefs
With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Sovereign Fund Attempts to End $7.5 Billion Citi Share Purchase; Credit Suisse to Pay U.S. $536 Million Penalty; Cohen: U.S. Economy to Slow in 2010; Roy Disney Dead at 79; Former TPG, Lazard Employees Sued by SEC for Insider Trading; Galleon Group Founder Indictment Alleges Fraud, Conspiracy; Comcast Launches Online TV Service
- The Abu Dhabi Investment Authority (ADIA) is trying to call off a deal it made to buy $7.5 billion of Citigroup Inc. (NYSE: C) stock at eight times yesterday's (Wednesday) price, saying Citi misled it about the investment, Bloomberg News reported. The sovereign fund alleged "fraudulent misrepresentations" and seeks more than $4 billion in damages if the deal is upheld, ADIA said in an arbitration claim. Citi calls ADIA's claims "entirely without merit."
- Switzerland's Credit Suisse Group AG (NYSE ADR: CS) will pay the U.S. government $536 million for conducting business with Iran and other sanctioned countries, prosecutors said yesterday (Wednesday). The bank moved more than $1.6 billion through the U.S. financial system on behalf of Iran, Sudan, Myanmar, Cuba and Libya, documents filed in federal court and obtained by Reuters showed.
- U.S. housing starts rebounded sharply, rising 8.9% to a seasonally adjusted 574,000 units on an annualized basis in November, the Commerce Department said. Economists polled by MarketWatch.com were expecting a pace of 563,000. "We now expect both starts and permits to rally significantly further over the next few months, though the big test for the market will come in the spring," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd.
As Time's "Person of the Year," Fed's Bernanke Joins a Long List of Infamous Underachievers
There's a culture in our society that rewards bad behavior. Take the Fort Collins, Colo. couple that pretended to send their 6-year-old boy up in a homemade balloon so the family could star in a reality show?
Well, Time magazine's anointment of U.S. Federal Reserve Chairman Ben S. Bernanke as its "Person of the Year 2009" is an example of the same thing.
For starters, no other U.S. central bank head has been a "Person of the Year." Not William McChesney Martin Jr. (Fed chairman, 1951-70) who defined monetary policy accurately, saying the Fed's job was "to take away the punchbowl just as the party gets going." Not even Paul A. Volcker (Fed chairman, 1979-87), who bravely pursued a tight-money policy that broke the back of inflation.
The Three Tech Businesses Investors Can't Afford to Ignore in 2010
The technology sector has always been about The Next Big Thing, and while next year will be no exception, products and services purchased will more reflect the needs of consumers and businesses – unlike the past when more tech buys reflected "wants."
Call 2010 the year of "necessary technology."
While 2009 has seen a dramatic turnaround in the world's stock markets, the rest of the key economic indicators – such as manufacturing, inventories, and jobs – have lagged behind. This has prompted less discretionary spending on technology, and even a postponement of some necessary purchases.
FTC Sues Intel in Antitrust Action as EU Settles With Microsoft
The U.S. Federal Trade Commission sued Intel Corp. (Nasdaq: INTC) yesterday (Wednesday) accusing the world's leading computer chipmaker of illegally using pricing deals and other tactics "to stifle competition and strengthen its monopoly."
The complaint says Intel tried to block "superior" products by rivals and deprived consumers of choice and innovation for 10 years.
"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard A. Feinstein, the FTC's director of competition.
Tax Break Negates U.S. Profit from Citi's TARP Repayment
The U.S. government is forfeiting billions of dollars in tax revenue collections from Citigroup Inc. (NYSE: C) that could be worth more than the profit reaped from the bank's repayment of bailout funds.
The U.S. Treasury's Internal Revenue Service (IRS) on Friday made an exception to longtime tax rules that will enable Citi to avoid taxes on its next $38 billion in profits – the value of the bank's past losses at the end of the third quarter, The Washington Post reported.
"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," Robert Willens, an expert on tax accounting who runs a firm of the same name told The Post . "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts."
Fed Maintains Monetary Policy but Eyes Inflation in the Offing
The Federal Open Market Committee (FOMC) today (Wednesday) announced that it would leave its benchmark federal funds rate at a record low range of 0-0.25% for an extended period, despite recent signs that the U.S. economic recovery is accelerating.
Most analysts anticipate the Fed will maintain its loose monetary policy well into 2010, as the economic recovery, while gathering steam, remains fragile. Job losses abetted in November and the unemployment rate slid to 10% from a 26-year high of 10.2% in October. And while construction of new homes rose to an annual rate of 574,000 last month – 8.9% above the October rate 527,000 – that's still 12.4% below the 655,000 rate reached in November 2008.
"Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement over recent months," the FOMC said. However, "businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls."
If U.S. Oil Companies Aren't Winning Bids in Iraq, Who Is?
Iraq has auctioned off more proven oil reserves in the past six months than are collectively held by the United States, Mexico, and the United Kingdom.
But U.S. oil companies have signed surprisingly few development contracts – and foreign rivals have swooped in to scoop up major deals.
Take last weekend, when Iraq wrapped up the biggest oil-field auction in history. Major new deals were announced by Europe's Royal Dutch Shell PLC (NYSE: RDS.A , RDS.B), OAO Gazprom (OTC ADR: OGZPY), Lukoil (OTC ADR: LUKOY), China's China National Petroleum Corp. (CNPC), and Malaysia's Petroliam Nasional Berhad (Petronas).
The U.S. oil majors – ExxonMobil Corp. (NYSE: XOM), ConocoPhillips (NYSE: COP) and Chevron Corp. (NYSE: CVX) – were nowhere to be seen.
How Simple Investing Strategies Can Generate Maximum Profits
If you're feeling overwhelmed by the investment choices and economic challenges in today's financial markets, that's understandable. As a veteran writer and investor, I can attest that it's all too easy to wander off into the weeds by getting too complicated.
That's a big reason why – in my Strategic Advantage advisory service – we try to keep things as simple as possible. It's a strategy individual investors would do well to follow.
If you can stay out of bear markets and participate in the largest portion of bull-market cycles, you can make a lot of money as an investor. They key idea is to make the markets work for you when they are open for business – and to get out of them when they're closed.
Investment News Briefs
With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
House Rethinks Glass-Steagall; Boeing's Dreamliner Finally Lifts Off; Manufacturing, Wholesale Prices Both Rise; Best Buy Beats Street; GE Sees Flat Revenue; Wells Fargo to Pay Back TARP
- The Glass-Steagall Act, which barred banks that took deposits from underwriting securities, is under consideration for reinstatement by the U.S. House of Representatives, according to Majority Leader Steny Hoyer, D-MD. A renewal of the 1933 law “is certainly under discussion” by House members, Hoyer told Bloomberg News in Washington. The Glass-Steagall law was repealed in 1999 to help pave the way for the formation of Citigroup Inc. (NYSE: C) with the $46 billion merger of Citicorp and Travelers Group Inc. Enactment of the law has generated debate about whether it helped spawn reckless lending practices and financial speculation that led to the meltdown of credit markets last year and the $700 billion U.S. bailout of troubled banks, including Citigroup. “As someone who voted to repeal Glass-Steagall, maybe that was a mistake,” Hoyer said.